Participating and non-participating whole life insurance generally guarantees the premiums, the amount of insurance and the cash surrender value. What’s special about it is that it allows the policyowner to share in the insurer’s earnings.

Whole life insurance

Whole life insurance provides coverage until the death of the insured person. As long as you’re insured with this type of insurance, you can be sure that your beneficiaries will ultimately receive the amount for which you are insured.

Whole life insurance can be very flexible in terms of premiumAn insurance premium, or premium, is an amount that a person or company must pay on a regular basis to keep their insurance in effect. For example, if Mary has to pay $200 per year to keep her life insurance in effect, then the premium is $200.
The insurance premium should not be confused with the face amount, or insured amount, which is the amount that the insurance company has to pay out. In the same example, if Mary has life insurance that pays $100,000 to Peter upon her death, then the face amount is $100,000. 
payments. For example, with some contracts, payments have to be made for a fixed period rather than for your whole life.

In general, whole life insurance covers the same needs as term life insurance, in addition to being used to leave an inheritance.

Cash surrender value and loans

Whole life insurance contracts generally include a cash surrender value. This value is the money you can receive upon cancelling the insurance contract.

For more information, visit the cash surrender value page.


If in doubt

Always contact your insurer or representative if you have questions about the guarantees or how your life insurance works.

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Participating whole life insurance

For this type of insurance, the premiums you pay and those paid by other participating whole life insurance policyholders are pooled in a separate account called the “participating account”. The amounts accumulated in this way are invested by the insurer, who may use them to do such things as pay the amounts of insurance to the beneficiaries upon the death of insureds and cover its fees. Each year, you receive dividends based on the performance of the investments within the participating account. The dividends are not guaranteed.

The insurer will generally give you the option of:

  • Taking the dividends in cash
  • Leaving the dividends to accumulate at a certain rate of return.
    The accumulated amounts will be added to the amount of insurance in the event of death.
  • Using the dividends to reduce the premium or fees you pay
  • Purchasing paid-up additions
    A paid-up addition is additional insurance that provides lifetime coverage and is paid for with a single premium using the amount received as dividends. This additional insurance may, in turn, earn dividends and guarantee a cash surrender value. As a result, the amount of insurance, dividends and cash surrender value grow from year to year.
  • Purchasing one-year term life insurance
    This life insurance will be added to your existing insurance. It covers you for only one year. The amount of insurance, however, is higher than if you choose paid-up additional insurance.

Did you know?

Participating whole life insurance costs more than equivalent term life or whole life insurance. Why? Because it includes an option to receive dividends.

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The size of the dividend received depends on several factors, including investment returns, insureds’ mortality and expenses.